Common Mistakes To Avoid When Leasing a Commercial Property
Category Newsletter: Latest News
Renting a commercial property is a significant decision for any business. The location, size and suitability of the property can significantly impact the success of your business. However, navigating the world of commercial real estate can be challenging and mistakes can be costly. Below are some common mistakes to avoid when renting a commercial property.
NEGLECTING DUE DILIGENCE
Rushing into a lease without properly researching the property could lead to unforeseen issues. Ensure that a thorough inspection is conducted and that the Lease agreement and all related documentation have been reviewed meticulously. Skipping due diligence is one of the most crucial mistakes you can make when leasing a property. Ensure that your agent disclosed all known facts and defects related to the property.
IGNORING THE LOCATION
Location is paramount in the world of commercial real estate. Choosing a property in an unfavourable location could affect the growth or nature of your business. Proximity to suppliers and customers should be considered, as well as visibility and accessibility to the property. Make sure the property's location is suited to your target market and business goals.
NOT UNDERSTANDING LEASE TERMS
Commercial property Lease agreements can be quite complex. Multiple clauses and terms could result in financial implications for you and your company. Failure to fully understand lease terms and clauses could result in financial implications, unexpected costs or legal issues. Be aware of rental increases, maintenance responsibilities, lease duration and additional responsibilities applicable to the tenant and landlord.
OVERLOOKING HIDDEN COSTS
Costs for renting a commercial or industrial property extend beyond payable monthly rental. Tenants often make the mistake of overlooking additional expenses such as insurance, maintenance, utilities, common area usage charges, parking, fixed electricity charges, generator or backup water fees, business park charges, security charges and VAT payable. Budgeting for these hidden costs are crucial to avoid financial strain of your business.
SKIPPING NEGOTIATION
This is a vital part of the leasing process. The initial terms offered by the landlord are not always set in stone. Take time to negotiate favourable terms such as property improvements, beneficial occupation based on the length of your proposed lease term and various cost reductions. Proper negotiations could provide long-term business benefits.
NOT EVALUATING INFRASTRUCTURE AND AMENITIES
Various amenities are usually offered with commercial property such as internet connectivity, security, access to public transport, backup power and water and parking. Although offered, this could still be an additional cost to your business so do not make the mistake of overlooking it. The use of said facilities could positively or negatively impact your operations and the satisfaction of your clients and employees. Ensure that all amenities and infrastructure align with your business and operational needs.
UNDERESTIMATING RENOVATION COSTS
Should the property require renovations to suit your operational needs, ensure that all estimated costs and timelines are accurately accounted for and made provision for. Underestimating renovation expenses could result in financial strain and delay business operations. Make sure you take this into account and factor in contingencies.
IGNORING TENANT REVIEWS
Take into consideration the experience of the current or previous tenant of the property or even the neighbours, should it be sectional title and have the same owner or property manager for the business park. Certain reviews could provide insight to property maintenance, and the landlord or property manager's responsiveness and attentiveness. Reach out to trustworthy existing or former tenants to gather information to make an informed decision. However, try to be slightly impartial to all information received as it is possible for previous tenants to provide false information should they have not done their due diligence or factored in any of the above advice. This is where we backtrack to the negotiation period to ensure all parties have come to an amicable agreement preferably in writing.
Leasing a commercial property is a significant investment that can shape the future of your business and should not be taken lightly. Marder Properties is available to assist you with all of your commercial, industrial and investment property needs and to provide you with exceptional service on your journey leasing or purchasing a commercial or industrial property. Contact us today to find your company's future home.
Author: Marder Properties
